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Special Report

Canada Retail Sales Research Brief

December 2023

Household Spending Holding Up in the
Face of Higher Borrowing Costs

Canadians continue to spend. Retail sales rose 0.7 per cent monthly in October — the largest increase since January. After accounting for inflation, this translated into a 1.4 per cent gain. Sales were up 2.2 per cent on an annual basis as record population growth and a more resilient than expected consumer base aided household spending. The strength in retail sales was broad-based, with sales volumes rising in every category, aside from a 0.1 per cent decline in building material and garden equipment amid a weakening housing market. Preliminary estimates for November suggest that inflation-adjusted sales inched up once again, presenting a possible upside scenario, counter to the general consensus that GDP will edge down in the final quarter of the year. However, with borrowing costs still working their way through the broader economy and the inventories-to-sales ratio elevated, any growth in GDP will likely be weak.

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